A.M. Best Affirms Ratings of Health Net, Inc. and Its Subsidiaries; Removes Ratings From Under Review.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength ratings (FSR) of Health Net Inc.'s (Health Net) (Woodland Hills, CA) (NYSE:HNT) life/health and health maintenance organization (HMO) subsidiaries and the debt and issuer credit ratings (ICR) of Health Net. Additionally, A.M. Best has affirmed the ICR of Health Net of California, Inc. and has assigned ICRs to the other insurance entities. All ratings have been removed from under review and assigned a stable outlook. (See below for a detailed list of the ratings.)

These rating actions reflect the substantial turnaround in Health Net's operating performance and improvement in its capitalization. Offsetting factors include declining membership and profitability concerns with the New Jersey Plan.

Operating performance improved significantly both on an annual and quarterly basis in 2005 as a result of initiatives taken. As a result, net income rose significantly in 2005 and was on par with 2003; additionally, earnings are expected to improve further in 2006. The recovery in earnings coupled with Health Net's not taking dividends from its subsidiaries allowed growth in capitalization and the level of risk-based capital to improve at the subsidiaries.

Total membership declined by 6% in 2005 but the commercial segment decreased by 9%. This drop in membership was a result of corrective initiatives taken. In 2006, the commercial segment is highly competitive and growing membership organically could be challenging. Membership should receive a boost in 2006 due to the acquisition of membership from a plan in California. While results in the Northeast region have improved, operations in New Jersey are still in the midst of a turnaround and could be a drag on overall performance for this region. However, A.M. Best does acknowledge that results in the Northeast, including New Jersey, have improved from 2004.

The FSR of B++ (Very Good) has been affirmed and ICRs of "bbb" have been assigned with a stable outlook to the following subsidiaries of Health Net, Inc.:

--Health Net Life Insurance Company

--Health Net of Arizona, Inc.

--Health Net Health Plan of Oregon, Inc.

The FSR of B+ (Very Good) has been affirmed and ICRS of "bbb-" have been assigned with a stable outlook to the following subsidiaries of Health Net, Inc.:

--Health Net of Connecticut, Inc.

--Health Net of New Jersey, Inc.

--Health Net of New York, Inc.

--Health Net Insurance of New York, Inc.

The ICR of "bb" has been affirmed with a stable outlook for Health Net, Inc.

The FSR of B++ (Very Good) and the ICR of "bbb" have been affirmed with a stable outlook for Health Net of California, Inc.

The following debt rating has been affirmed with a stable outlook:

Health Net, Inc.--

--"bb" on $400 million 9.875% senior unsecured notes, due 2011

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.